The French Investment Market - October 2018

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Despite a slight Q3 slowdown y-o-y, 2018 investment has clearly increased after 9 months of sustained activity! Q4 should also prove active, as has been the case these past few years. The question is will we equal the volumes transacted last year, or will we exceed them to reach 2016 or even 2007 investment levels (€28.4 billion and €30.8 billion respectively)…

Money is available across all types of assets and risk categories. Sellers obligated to sell are almost non-existent, and institutional investors are not selling their assets due to the difficulty of reuse.

For now it is difficult to issue forecasts for 2019, but there are few potential arbitrage projects. It will therefore be necessary to carefully monitor macro-economic developments, particularly Fed interest rate changes, which could increase those of the ECB... It seems a yield rate increase is not for the immediate future...

Our vision of the office Market

The view of
Arnaud de Sordi

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Despite a slight Q3 slowdown y-o-y, 2018 investment has clearly increased after 9 months of sustained activity! Q4 should also prove active, as has been the case these past few years. The question is will we equal the volumes transacted last year, or will we exceed them to reach 2016 or even 2007 investment levels (€28.4 billion and €30.8 billion respectively) …

Amounts invested in the non-residential real estate market in France

Amounts invested in the non-residential real estate market in France

After a robust 9 months, non-residential real estate investments have increased by nearly +23%, with a total investment volume of €17.2 billion;

Total investment volume is still somewhat less than that of 2016 (€17.2 billion versus €18.5 billion);

Y-o-y, the decrease is noticeable as Q3 investments dropped by -12%.

Amounts invested in non-residential real estate by size – portfolios and single assets

9 months 2017

9 months 2018

Less than € 50 million

4 107

3 422

50 to € 100 million

2 850

3 907

100 to € 300 million

4 836

5 902

300 to € 500 million

1 616

2 292

More than € 500 million

2 191

1 723

INVESTMENTS IN NON-RESIDENTIAL REAL ESTATE BY SIZE - Octobre 2018

€ Million

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Source : MBE Conseil

Amounts invested in non-residential real estate by size – portfolios and single assets

In the first 9 months, transactions > €100 million increased slightly by +5.35%; transactions of €50 €100 million increased significantly by +37%, and transactions < €50 million fell by -17%;

The €100-€500 million segment increased by +27% compared with 2017, which substantially compensated for the -21% decrease in transactions > €500 million (only 3 transactions: Quadrans, Apple Champs Elysées and the Westin Hotel).

Amounts invested in non-residential real estate – per product

Despite a Q3 slowdown yo-y, office investments continue to grow and have increased by +10% since January 2018;

Note that 12 transactions represented 36% of total office investments; each of these transactions exceed €200 million!

Investment in all other asset categories has increased (business, retail, healthcare, hotel/leisure), except for logistics. Logistics investments decreased in the first 9 months by -34%, which confirms the exceptional nature of the 2017 Logicor transaction.

Savings collectors (SCPI, OPCI and insurance companies) represent €5.1 billion, i.e., 29.7% of total investments, a decrease of 19.4% y-o-y, primarily due to a significant decrease in OPCI /SCPI investments;

Strong increase in CORE and CORE+ funds, which represent 41.3% of the total volume at 9 months, i.e., an increase of nearly +30.8%!

If we add opportunistic funds, which represent 16.8% of total investments and a spectacular 92.1% increase, then investment funds represent a total of slightly more than 58%!

Amounts invested in the Île-de-France region – by geographic area

9 months 2017

9 months 2018

Paris CBD

1 294

4 000

Paris Secondary BD

1 320

723

Other Paris

1 521

2 337

West CBD

2 953

1 921

Inner Suburbs

756

1 009

Outer Suburbs

3 013

2 578

Provinces

3 665

3 461

Global Portfolios

1 069

1 217

INVESTMENT VOLUMES IN THE GREATER PARIS REGION – BY AREA – Octobre 2018

€ Million

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Source : MBE Conseil

Amounts invested in the Île-de-France region – by geographic area

Paris accounts for 41.3% of investments, i.e., a +70.8% increase, including an increase of +309.1% in the CBD!

Paris CBD and Western Paris investments, as well as business hubs, have increased by 19.3%, and represent 38.4% of 2018 investment volume;

Investment in the 2 rims remains stable, and recorded only a slight decrease of 4.8% (even if we must note the +33.5% increase in the Inner Rim) and a volume representing 20.1% of the total at 9 months;

Investment in outer regions has decreased slightly (5.5%) representing 20.3% of investments. Portfolio investment has increased slightly (+13.8%), despite a share that remains low due to the lack of opportunities (7.6% of 2018 investments).